Floundering Swing State Economies Could Doom Obama: Ezra Klein
The 2012 election is looking better for President Barack Obama. In the latest Washington Post-ABC News poll, he opened a six-point lead against Mitt Romney -- a finding confirmed in two other polls this month by Rasmussen and Reuters-Ipsos.
Part of Obama’s gain, no doubt, is due to the jobs reports from December and January, which have convinced many that the economy is in recovery.
But as Al Gore can tell you, presidential elections are not won nationally. They’re won in individual states. In particular, they’re won in the small subset of states that can tip either way, the so-called swing states. There, Obama isn’t doing so well -- perhaps because, in those states, the economy isn’t doing so well.
In late January, Gallup surveyed the dozen swing states it deemed most likely to decide the election -- Colorado, Florida, Iowa, Michigan, Nevada, New Hampshire, New Mexico, North Carolina, Ohio, Pennsylvania, Virginia and Wisconsin -- and found that Romney held a one-point advantage over Obama. That lead is not statistically significant. But it’s a lot better than a six-point deficit.
Obama won most of those states in 2008. So it’s hard to argue that the gulf is partisan or ideological. The likelier explanation is economic. The five largest of those swing states -- Florida, Pennsylvania, Michigan, Ohio and North Carolina -- control more than a third of the electoral votes necessary to win the presidency. In December, they had a collective unemployment rate of more than 9 percent, half a percentage point higher than the national unemployment rate. (State-by- state numbers for January haven’t been released yet.)
Similarly, an analysis conducted in January by the Progressive Policy Institute looked at the housing market in 16 battleground states (adding Arizona, Indiana, Minnesota and Missouri to Gallup’s list). It found that since October 2008, battleground states have experienced an average drop in home prices of 16 percent. In three states -- Florida, Arizona and Nevada -- the drop was more than 30 percent. Nationally, the drop has been 11 percent.
So Obama will be running in swing states where the regional economy is somewhat worse than the national economy. In some of those states, he’ll be contending with an economy that’s much worse than the national economy. Florida, for instance, has a 9.9 percent unemployment rate in addition to its housing decline.
It’s a bit early to say how much this matters. Political scientists insist that elections aren’t decided by fixed economic data so much as by moving economic trends. There’s little evidence that Americans vote based on the unemployment rate or the gross national product. Rather, they vote based on the change in the unemployment rate and the change in the gross national product. In particular, they vote on the change in those indicators during the year prior to an election.
It’s possible that, just as these states fell further in the recession than other states, they will recover more quickly. Take Florida: Although its unemployment rate is high, it’s fallen 2.1 percentage points since December 2010. That’s a larger, faster drop than we’ve seen nationally. If that trend continues -- or accelerates in the event the state’s housing market has reached its bottom -- Florida could prove unexpectedly strong for Obama, as faster-than-average growth trumps higher-than-average unemployment.
It’s also possible that some swing states will have a harder time recovering, or that some of the employment recovery will be due to outmigration, leaving wrecked communities behind. In that case, voters in those states might blame Obama and register their unhappiness in November.
No National Economy
Behind all this is an economic reality that we often forget. We talk about the American economy, but we don’t really have a national economy. We have 12.6 percent unemployment in Nevada and 3.3 percent unemployment in North Dakota. We’ve seen home prices fall by more than 30 percent in Arizona and rise by 0.8 percent in Indiana.
Like the euro area, where Greece is in a deep crisis but Germany is in extraordinarily good health, there’s a great deal of economic variation in the U.S., with some states experiencing a small depression and others barely noticing a bump.
But unlike the euro area, we think of ourselves as a national economy, so there has been little discussion of how to direct policies at specific states. Many policies, such as unemployment insurance, are triggered automatically. But there’s been no “Nevada rescue package” that was designed separately from broader, national measures passed by Congress. Economically speaking, that’s been inefficient. We have spent many stimulus dollars in Texas, where employment growth is rapid and the housing market is strong, when they could have been better spent in Arizona.
That economic inefficiency is far outweighed by the benefits of national solidarity. To see the other side of the coin, look toward the euro area, where a solution has been made immeasurably more difficult because the various member states don’t want to bail one another out.
I wouldn’t argue for a move toward state-specific policies. The benefits of national economic solidarity are simply too great. But many of the states that could have benefited most from targeted policies happen to be swing states. Consequently, an absence of such policies has entailed excess pain for those economies -- and perhaps for Obama’s re-election effort.
(Ezra Klein is a Bloomberg View columnist. The opinions expressed are his own.)
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